Building work up 2.7% in latest quarter

Total building activity around the country rose 2.7% for the quarter to September, based on a 4.1% rise in residential activity, according to Statistics New Zealand data.

Westpac Senior economist Satish Ranchhod said the September quarter increase followed softness earlier in the year, and left building levels up only 0.7% over the past year.

''September's increase was mainly related to a lift in residential construction activity. This includes a solid rise in construction spending in Auckland,'' Mr Ranchhod said in a statement.

While building activity in other parts of the country also picked up, residential investment spending in Canterbury had flattened in recent months, albeit it remained at a firm level, he said.

Yesterday's SNZ data measured building work put in place, while building consents issued, which showed a decrease for October, indicates the pipeline of upcoming building work.

ASB senior economist Jane Turner said it was encouraging to see a strong construction sector performance during the third quarter, in light of recent challenges, in particular capacity constraints.

''Housing construction demand is likely to slow in the near term due to uncertainties from the change in Government, but we expect activity to recover once the KiwiBuild programme commences,'' Mrs Turner said.

SNZ's construction statistics manager Melissa McKenzie said residential building activity was at a record high, while non-residential activity peaked in late 2016.

The seasonally adjusted value of total building work rose 4% in the September quarter, having gained 0.9% in the June quarter

Mr Ranchhod said non-residential construction recorded only a small gain over the quarter and activity appeared to have been weighed down by ''softness'' in Canterbury.

''There is a large pipeline of planned construction work,'' he said.

However, Mr Ranchhod cautioned the combination of stretched construction sector capacity, rising costs and tighter credit conditions meant building activity was likely to increase at a gradual pace during the coming year.

The actual value of all building work rose 4.9% to $5.16billion in the quarter to September. The value of residential work was up 7.6% to $3.36billion, while non-residential work increased 0.2% to $1.8billion, BusinessDesk reported.

The value of all building work in Auckland was $1.95billion, up 6.8% on the year. It was $998million in Canterbury, down 14% on the year.